The Courier & Advertiser (Perth and Perthshire Edition)
Energy bills fall at last but no sign of return to pre-global crisis levels
The average household energy bill will fall by £426 a year from July after Ofgem dropped its price cap following tumbling wholesale prices.
The regulator announced it is cutting its price cap from £3,280 to £2,074 from July 1, marking the first time consumers on default tariffs have seen their prices fall since the global gas crisis began more than 18 months ago.
At its peak, the price cap reached £4,279 and, “whilst the current level is lower than last quarter, it is still above the levels it was before the energy crisis took hold, meaning many households could still struggle to pay bills”, the regulator said.
Households have been partly shielded from the most recent rise in prices by the Government’s Energy Price Guarantee (EPG), which limited annual energy costs to £2,500 for the average household – subsidising Ofgem’s price cap.
Ofgem’s latest cut means its cap will again govern household bills, resulting in a reduction of £426 from £2,500 to £2,074, a fall of about 17%.
Ofgem chief executive Jonathan Brearley said more focus will be needed for government, the regulator and the industry to support the most vulnerable groups this winter.
Mr Brearley said: “It is encouraging to see signs that the market is stabilising and prices are moving in the right direction. People should start seeing cheaper energy bills from the start of July, and that is a welcome step.
“However, we know people are still finding it hard, the cost-of-living crisis continues and these bills will still be troubling many people up and down the country. Where people are struggling, we urge
them to contact their supplier who will be able to offer a range of support, such as payment plans or access to hardship funds.
“In the medium term, we’re unlikely to see prices return to the levels before the energy crisis, therefore we believe it is imperative that government, Ofgem, consumer groups and the wider industry work together to support vulnerable groups.”
Chancellor Jeremy Hunt said he was “willing to do what it takes” if energy bills rose for households again this autumn.
Asked by Sky News economics and data editor Ed Conway if he could guarantee he would step in if energy bills started to rise again, Mr Hunt said: “All I can say is that I think I’ve demonstrated in the autumn statement, and the spring budget where I extended the energy price guarantee for another three months, funded in part by a windfall tax on the oil companies, that we are willing to do what it takes.”
He added the Government was not expecting a major increase in Ofgem’s energy price cap.
Energy Security Secretary Grant Shapps said: “I’m
relentlessly focused on reducing our reliance on foreign fossil fuels and powering-up Britain from Britain to deliver cheaper, cleaner and more secure energy.”
Campaigners warned that bills would remain unaffordable for millions of households.
Which? energy editor Emily Seymour said: “The news that the energy price cap will come down is positive, but many will be confused about what exactly this means for them and their monthly outgoings.
“While the new price cap on variable tariff rates will see typical bills drop by around £500, energy bills will be almost double the amount they were before the energy crisis began and these prices will still be unaffordable for many households.”
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “The sting in the tail is that customers are still going to be paying roughly the same for their energy as last winter.
“And after months of inflation and the wider cost-of-living crisis, people are even less able to afford these high energy bills.
“The UK Government needs to use the summer to fix Britain’s broken energy system, because for millions of people the energy bills crisis is far from over.
“This means ramping up energy efficiency programmes, helping the public with energy debt and reforming energy pricing arrangements so people don’t suffer again this winter.”
Martin Lewis, founder of Moneysavingexpert, said: “This will be a relief for many, yet most will still be paying more for their
This still leaves people paying double what they did before the energy crisis hit
energy than during the winter.
“This is because, apart from those with high use, the drop in the rates doesn’t make up for the £66 per month state support people got until April – and most are on monthly direct debit, which means they pay the same in summer as winter.
“Overall, this still leaves people paying double or more what they did before the energy crisis hit in October 2021.
“The fact the state is paying far less than planned to support people’s bills means there is some wriggle room here for targeted support for another hard winter coming for those who are just above the benefits threshold. Though I’m not holding out much hope that it’ll happen.”
The cap does not set the maximum a household will pay for their energy but limits the amount providers can charge them per unit of gas or electricity, so those who use more energy will pay more.
The standing charge – the roughly £300 paid each year by households just to access gas and electricity – has not been included in the cap and will not fall.